Court Orders Can Affect TSP Payouts

A court decree of divorce, annulment or legal separation can make an award from a Thrift Savings Plan account to someone other than the participant, such as a spouse or a former spouse.

The TSP will honor such orders if they are issued in connection with such an action and they comply with the board’s regulations. It also will honor preliminary court orders for the purposes of freezing a participant’s account as well as amendatory court orders issued after such a decree.

When the TSP receives a court order, the account of the participant is frozen, meaning that the participant is not allowed to withdraw the account, except to meet certain IRS mandatory distributions, or receive a loan from the account. All other account activity is permitted, however. If the TSP determines that the court order is qualifying, it issues a statement regarding the effect that compliance will have on the account and a description of the method by which any entitlement was calculated, the results of the calculation and the circumstances under which payment will be made.

The TSP will make only one disbursement under a court order even if the order on its face requires a series of payments.